Kunal Rane regularly surveys the city for a house that he desperately hopes he can buy. He has been doing this every weekend for the last three years, but the search still goes on. Prices have risen sharply in the last five years, making home buying almost impossible for most residents of Mumbai.
Rane, who works as an assistant manager with NSDL, was born and brought up in Parel, and wanted to buy a house there. "As time passed, I realised I would never be able to afford a house in Mumbai and started looking at other areas, such as Thane. Now even a house there has gone beyond my budget and I am not too keen on going further away," says Rane. The majority of homebuyers in the city have a similar story.
Developers have tried various means to boost sales - such as offering freebies and discounts - but until prices are corrected, homes will continue to be out of reach of most homebuyers, making them think twice about committing to such a large purchase.
This year, even the festive season is unlikely to bring cheer to developers. Homebuyers are still waiting for prices to drop. In the coming months, only those who feel they have waited too long because of the slump in the Indian market are likely to buy new houses, said Ramesh Nair, managing director, West, Jones Lang LaSalle India, a real estate services firm.
"The 'increase' in sales one sees at this time is because of a few buyers finally deciding to take the plunge in this period. This should not be misread as a boost brought on by incentives and freebies, though these certainly add some flavour," said Anuj Puri, Chairman - CII Real Estate Conclave and country head of Jones Lang LaSalle India. Generally, during the festive season, developers line up new projects and sales also rise.
"This time, inventory [unsold stock] is so high that the new projects have not really taken off," says Mousumi Roy, director, FICCI. The demand for houses is huge in Mumbai because of the increasing population.
"This has created false confidence that property will sell even if it is overpriced," says Anuj Puri. "The biggest problem is that the supply is high for expensive/luxury homes, and demand is high for properties at affordable rates. Properly priced homes are still selling and will continue to sell."
Many who thought of buying a house in Mumbai are now losing hope of ever managing to do so. They are now investing the money saved for buying a home in mutual funds, gold and fixed deposits.
After much deliberation, banker Rohit Desai finally decided he would buy a house in Mumbai. So, in May this year, he asked several builders the price of a 1-BHK in Dombivli.
They told him it would cost about Rs 25 lakh to Rs 35 lakh. He decided to hold on for a while and look at other options. When he revisited the area in August looking for a 1-BHK, prices had gone well beyond this range. He has now dropped the idea of buying a house.